Real estate sector expected to witness a surge post the conclusion of the national elections
UK Housing Market Shows Signs of Recovery After Presidential Election
The UK housing market is showing signs of recovery following the presidential election in July 2024, according to market experts. The average house price in the UK reached £281,000 in April 2024, marking a 1.1% increase over the past year, as per the latest ONS house price index.
Lucian Cook, Head of Residential Research at Savills, attributes the improved outlook to a slight decrease in mortgage costs and less volatility. Cook, who has been a director in the Savills research team since 2007, leads a team of 25 researchers and offers consultancy services to various clients in the housing market.
The housing market could experience a further boost post-election, with Savills now predicting a 2.5% increase in the average home value over the rest of the year. This increase follows a 0.9% rise in March 2024 and breaks an eight-month streak of annual price declines.
Spring is traditionally the prime selling season, with 27% of sales occurring during this time over the last five years, excluding 2020. The post-election period is expected to see a surge in market activity, as political clarity returns, with the 'Boris bounce' following the 2019 election being a notable example.
However, the housing market is not the only sector experiencing growth. The Consumer Prices Index (CPI) fell to 2%, its lowest rate in almost three years in May. This decrease in inflation could lead to lower mortgages due to an eventual interest rate reduction, as predicted by industry experts. The Bank of England's deputy governor, Ben Broadbent, has suggested that the base rate could fall to 4.5% by the end of the year.
Political parties, including the Conservatives, Labour, Liberal Democrats, and Reform, have promised to raise the Stamp Duty threshold for first-time buyers if elected. None of the search results mention any party promising to increase the tax allowance for first-time buyers in the general election scheduled for July 2024.
Professor John Bryson, who holds the Chair in Enterprise and Economic Geography at Birmingham Business School, suggested the decision to not reduce the bank rate was put off due to the general election. He believes that the next government will benefit from an eventual interest rate reduction.
In England, average house prices climbed to £298,000, up by 0.6%. The Bank of England stressed that the timing of the general election had no bearing on the decision to keep rates at 5.25%.
In conclusion, the UK housing market is showing positive signs of recovery following the presidential election. With lower mortgage costs, less volatility, and a predicted interest rate reduction, the market is expected to continue its growth. The spring season, traditionally the prime selling season, is expected to see a surge in market activity, providing a further boost to the housing market.
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